The term "austerity" has become a popular and concise way of describing the various methods of economic belt-tightening being employed throughout Europe and much of the United States. But austerity has also been used to justify sweeping cuts in crucial social services that unduly burden lower-income earners, according to international political economist Mark Blyth, who appears in a new video produced by Brown University's Watson Institute for International Studies.
Explaining the world as a series "balance sheets," Blyth details the debt-fueled boom that effected both corporations and consumers. The rescue of "too big too fail" institutions put huge burdens national economies, Blyth says, which has lead to a virtually simultaneous series of tough political choices for world leaders. "Governments have to increase taxes (difficult) or cut services (easier)," Blyth notes.
But the cuts contained in world austerity measures may affect some more than others. Blyth suggests these cutbacks are likely to increase the gap between rich and poor:
"Where does this common sense virtue of austerity leave us it leaves us? It leaves us in a cycle, where those at the bottom end of the of the income distribution pay for those at the top with the same stagnant and skewed incomes that now buy less in a more unequal and unstable economy. There's a term for this: class politics. And it usually ends badly.
Blyth is working on a book tentatively titled "Austerity: The History of a Dangerous Idea."
WATCH the video: